TIG Insurance Co. v. City of Elkhart

This is
a declaratory judgment action over insurance coverage for an
underlying suit against the City of Elkhart. On November 6,
2017, Keith Cooper sued Elkhart, asserting a variety of
claims arising out of a 1998 conviction for which he has
since received a pardon. Elkhart in turn sought insurance
coverage from a number of insurance companies with which it
has held policies over the years, including TIG Insurance
Company. When none of the insurers agreed to provide
unqualified coverage, Elkhart filed suit in state court on
November 13, 2017, against TIG Insurance and other companies,
seeking a declaration as to the parties' rights and
obligations under various insurance policies in connection
with Mr. Cooper's suit.

On
December 15, 2017, TIG Insurance filed this action in federal
court against Elkhart and two other interested parties. TIG
Insurance seeks a declaratory judgment that it owes no
defense or indemnification obligations to Elkhart under its
policies with respect to Mr. Cooper's suit. Because that
exact same issue is already before the state court, Elkhart
moved to dismiss this action.[1] It argues that this Court should
abstain from exercising jurisdiction over this declaratory
judgment action since another parallel action is already
pending in state court.

“‘Under
what is known as the Wilton/Brillhart abstention
doctrine, district courts possess significant discretion to
dismiss or stay claims seeking declaratory relief, even
though they have subject matter jurisdiction over such
claims.'” Envision Healthcare, Inc. v.
Preferred One Ins. Co., 604 F.3d 953, 986 (7th Cir.
2010) (quoting R.R. Street & Co. v. Vulcan Materials
Co., 569 F.3d 711, 713 (7th Cir. 2009)). “This
discretion arises from the Declaratory Judgment Act, 28
U.S.C. §§ 2201-2202 itself, which provides that
district courts ‘may declare the rights and
other legal relations of any interested party seeking such
declaration.'” Id. (quoting 28 U.S.C.
§ 2201(a)). Thus, in the exercise of their discretion,
district courts may “stay or dismiss an action seeking
a declaratory judgment in favor of an ongoing state court
case.” Id.; see also Brillhart v. Excess
Ins. Co. of Am., 316 U.S. 491 (1942); Wilton v.
Seven Falls Co., 515 U.S. 277 (1995). There is no set
criteria for when a court should exercise its discretion to
abstain. However, the Seventh Circuit has recognized that
“the classic example of when abstention is proper
occurs where . . . solely declaratory relief is sought and
parallel state proceedings are ongoing.”
Envision, 604 F.3d at 986.

The
Court finds that this case fits comfortably within that
“classic example” and that abstention is
appropriate. There is no dispute that this case and the
ongoing case in state court are “parallel.” Two
actions are parallel “when substantially the same
parties are contemporaneously litigating substantially the
same issues in two for a.” Id. Each of the
parties to this action are also parties in the state action,
and the issues are identical in the two cases, as both
involve whether TIG Insurance is obligated to provide
coverage to Elkhart for Mr. Cooper's claims. The state
case involves a number of additional insurers as well, which
further favors abstention, as resolving this case, which
involves a subset of the state case, could create the
potential for inconsistent judgments. See Sta-Rite Indus.
Inc. v. Allstate Ins. Co., 96 F.3d 281, 287 (7th Cir.
1996) (holding that abstention would have been proper in part
because “a more comprehensive parallel state
case” was pending).

In
arguing that the Court should nonetheless exercise
jurisdiction, TIG Insurance notes that a previous case in
this district has already adjudicated TIG Insurance's
obligations under its policies relative to claims brought
against Elkhart by Mr. Cooper's co-defendant in his
underlying criminal case. TIG Ins. Co. v. City of
Elkhart, 122 F.Supp.3d 795 (N.D. Ind. 2015). TIG
Insurance argues that because that previous case involved the
same insurance policies and similar underlying claims, this
Court should proceed to adjudicate the present case. The
Court disagrees. Though that previous case may be
related to this one, the ongoing state case is
identical to this one, and will resolve the
parties' rights and obligations relative to the claims
asserted by Mr. Cooper. And TIG Insurance cites no case in
which a federal court declined to abstain under these
circumstances merely because a related case had previously
been decided by a federal court. The Court thus abstains from
exercising jurisdiction over this declaratory judgment
action.

Therefore,
the Court GRANTS Elkhart's motion to dismiss. [DE 25].
This case is dismissed without prejudice, and the Clerk is
DIRECTED to enter judgment accordingly.

SO
ORDERED.

---------

Notes:

[1] Elkhart asks that the case be
dismissed, or in the alternative, that the case be stayed
pending the resolution of the state court case. TIG Insurance
does not object to dismissing as opposed to staying this
action should the Court find abstention to be appropriate,
and the parties do not ...

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